Apple is close to regaining their status as a company with a trillion dollar market cap as they posted their best results for a June quarter ever. In the process, they blew away the “street” but also demonstrated very forcefully that they are more than an iPhone company. In fact, Apple iPhone sales were down 13% year -over-year and for the first time in awhile iPhone represents less than 50% of Apple’s sales. Yeah, they sold millions of iPhones and the iPhone dominated revenue but year-over-year iPhone sales were down and wearables (think Watch and AirPods), Mac, iPad and Services were all up. and that is a good sign.
This is a tough business, technology changes at light speed and a tech company’s biggest challenge is to embrace and lead that change. Apple has clearly demonstrated its ability to do that and this quarter’s financial results are a clear indication. Apple posted a profit of $10 billion on revenue of $53.8 billion. This compares with revenue of $53.3 billion last June quarter. Profits were down a bit year-over-year due to lower operating margins.
Apple’s wearables category which includes Apple Watch, AirPods, Apple TV, HomePod and Beats really cranked in this quarter posting revenues for the three months of an astounding $5.53 billion which is up from $3.73 billion last year. Tim Cook noted that Apple’s wearables business is bigger than 60% of the companies in the Fortune 500.
It was the Services sector that drove earnings with record setting revenue of $11.5 billion up from $9.6 billion last year. Apple Pay posted over 1 billion transactions a month which is twice what it was a year ago. Apple Pay is giving PayPal a run for the money (literally) by adding more users and monthly transactions a 4 times PayPal.
Mac sales were strong and set records in Japan and the US. The active installed base of Macs is at an all time high.
iPad sales were up $365 million from last year making it the third quarter with iPad growth.
Apple is projecting a strong summer quarter with revenue predicted at $61-65 billon.
Apple said the Apple Card will be coming this month and that the company’s acquisition of the Intel modem business was the second largest acquisition by dollars (Beats was first) and the largest in terms of personnel.
Apple’s Board of Directors declared a dividend of $0.77/share and announced that Apple had completed over $17 billion in stock buybacks in the quarter. Despite all the buybacks, Apple exited the quarter with an amazing $211 billion in cash and securities.
Congratulations to the entire Apple team for a great quarter and demonstration of the power of leading change in the tech world.